Outrageous Tax Havens

61: “On a January afternoon in George Town, the capital of the Cayman Islands, the sun beats down on three cruise ships anchored at Hog Sty Bay. Along the waterfront on Church Street stands a green-trimmed, white, five-story office building called Ugland House. From the outside, there’s no way to see it’s the official address of 12,748 companies.”

62-3: “J.P. Morgan Chase & Co. estimated in a June study that $650 billion of profit earned abroad by U.S. companies over decades had never been taxed by the U.S. That’s up from a cumulative total of $500 billion cited by J.P. Morgan in a study a year ago. In 2001, almost half of the money U.S. companies earned outside the U.S. — 47 percent — was accounted for in offshore tax havens such as the Cayman Islands, which has no corporate income tax, says Martin Sullivan, 45, a former U.S. Treasury Department economist, citing Commerce Department data. As a result, companies didn’t have to pay the 35 percent U.S. corporate income tax.”

62: “[Senator Carl Levin]: “When $250 billion of the $880 billion in foreign bank deposits within U.S. banks is attributed to the Cayman Islands, to connect the dots you’ve got to ask questions about the extent of tax dodging in that country and other tax havens.”

63: “In a March report on financial crime and international law enforcement, the U.S. State Department cited examples of transfer pricing abuses, without naming companies. It said one company claimed to import dish towels from Pakistan for $153.72 each; another reported it had imported briefs and panties from Hungary for $739.25 a dozen; a third claimed it had paid $4,896 a unit for metal tweezers imported from Japan. The report also cited a company claiming to export toilet bowls to Hong Kong for $1.75 each. The State Department report called those prices absurd and ridiculous.”

64: “The Caymans provide near-total financial secrecy for companies, banks and accounts. There are more than 500 banks and trust companies with deposits of more than $1 trillion in the Cayman Islands, according to the Cayman Monetary Authority. That’s more deposits than there are in New York City, says Manhattan District Attorney Robert Morgenthau.”

64: “The Caymans are home to about 40,000 residents and an equal number of foreign-owned companies.”